Carbon Taxes of the world

There has been something of a discussion about carbon taxes at Catallaxy which started out pretty constructive however it seems to have turned somewhat feral and I’ve called it a day because wading through the abusive mud comments to find the gem comments is too much like hard work. Instead I’ve been doing some digging on Google and I found a few things that surprised me.

Firstly there is this news that British Columbia has just implemented a carbon tax in their latest budget with the revenue being used to reduce personal income tax and company tax.

That, at least, is how the provincial Canadian government has designed the tax, which will rise incrementally until 2012. It starts at about 9 cents per gallon of gas, and ending at about 27 cents.

But the $1.85 billion annual tax is about influencing behavior, not generating revenue for the government. Income and corporate taxes are to be adjusted to save people about as much as the carbon tax will cost them, and low-income residents will get $100 each, plus $30 per child.

This has got Canadian environmental poster boy David Suzuki rather excited. Anyway I thought that this was interesting and I wondered if any other nations have carbon taxes. Apparently several do.

Sweden in fact implemented a carbon tax at a wopping .25 SEK/kg (US$100 per ton) back in 1991 although it then proceeded to give all forms of discounts to industry. Although even after those discounts industry has been paying around US$25 per ton.

I’m pretty much of the view that any government initiative to reduce CO2 emissions in Australia should be in the form of broadening the base which the fuel tax applies to. This idea was first outlined to me by John Humphreys in January 2007 and he later published a paper on the topic. The option from that paper that I’m most inclined towards is a A$30 per tonne of CO2 tax. Such a tax if applied to all fossil fuels as a replacement for existing petrol taxes would see the price of petrol decline by around 30 cents per litre and the wholesale price of electricity rise by about 1.8 cents per kWhr.

Of course I would not object if somebody wanted to use a carbon tax to reduce income tax. Any shift away from income tax is a good thing in my view. And if they wanted to simply cut income tax with no new taxes then even better.

You’re just trying to start a popular thread here, right? Do you think this will turn any less feral?

I’ll kick it off: Anyone who supports a carbon tax is a traitor to libertarian principles.

You keep talking about “broadening the base”… you are either delusional, or being extremely deceptive. There is no way that a reduction in fuel tax will be accepted in exchange for carbon tax. Please desist from talking like a god damned fool!

Traitor is pretty strong language Fleeced – maybe we should start some ALS show trials with GMB taking the lead as a McCarthy-type character role of Andrei Vyshinsky (Stalin’s Chief Prosecutor in the Great Purge). Just like Stalin’s great purge assisted the Red Army so masterfully in their struggle against the Germany Army, perhaps A Great Purification is the solution to bringing small government ideas into the mainstream? We could tell tales of how we surviced The Great Purification spreading a myth like Mao’s Long March. Even Minarchist sounds a little like Menshevik!

John Humphreys better pack his bags for Mexico and watch out for ice axe wielding cousins of GMB.

In honesty, I don’t disagree with a lot of what Terje says – eg, broadening the base is obviously better economics, regardless of the science. But it’s just not realistic to expect fuel tax to be reduced in exchange for this thing. It’s just not going to happen.

The income tax concession is more likely, but even that, I’m skeptical of being revenue neutral. New taxes rarely are, and I don’t like giving it to them for free.

The term “traitor” at least has some clear meaning. I don’t mind reasoned abuse along these lines. Calling somebody a “god damn fool” is less constructive but it is still on a somewhat higher plane than descriptions of your opponent that refer to unrelated aspects of anatomy. And even they would be amusing if they were merely occasional and didn’t clutter up discussion and distract from the substance. In any case Fleeced was just having a go. If he carried on in such terms in every single comment I might get bored and annoyed with him but currently he doesn’t have form in this regard.

In British Columbia they do seem to have made the carbon tax revenue neutral with cuts to income tax. And in Sweden I believe their carbon tax replaced previous energy taxes.

Reducing petrol taxes as part of a reform that is sound economically and caters to the AGW agenda would in my view sort the concerned citizens from the dark green fanatics. If the ALP went down this path the Greens would tie themselves in knots working out whether to vote with the government or against the government. You either have headlines in which the Greens oppose a carbon tax or headlines in which Greens support a cut in petrol taxes – either way the Greens look like failures. Family First would be happy because they are always banging on about the need for cuts in petrol taxes. The Liberals would fall all over themselves to be like Labor. And the Nationals would tell the country folk that it was there idea all along. The mob that fear modern civilisation would collapse if we don’t keep coal sacred should be please that we got a tax instead of a quota, but I suspect that like the extreme Greens their perpetual fear of their ideological opponents would mask any relief.

I’d support a carbon tax if there was solid evidence that it would make a blind bit of difference.

Such as global warming is still occurring, it is attributable to human activity, it is mainly due to carbon (rather than methane, etc), it will be reduced by less coal burning for electricity production, etc etc.

Without that it is nothing more than another version of a market distorting tax with social engineering objectives. FFS

I think that a carbon tax will make a very big and a very positive difference if it is instead of a cap and trade approach. A kick in the bum is ultimately better than a kick in the groin. However if it really is a broadening of the fuel tax then it isn’t even a choise between the lesser of two evils. It would be a genuinely positive no regrets economic reform. And it would in essence be a reduction in social engineering. No longer would electric trains have a fuel tax advantage over cars. No longer would the energy habits of inner city trendies be treated so much more favourablly than the energy habits of those that prefer motor sports.

It should be noted also that carbon taxes generally tax CO2e emissions. In other words if your power plant gives off methane then it gets included in the tax equation.

David – I think you should focus less on the intent of those that would support a carbon tax and more on the substance. Whether people support a policy because they want to save the world or feed the starving or help blind whales is really not overly relevant to any review of the merits of a given policy. We don’t accept dumb policy because it is advocated by a mass of people with grand misguided intentions, but neither should we reject the chance of worth while reform just because it is advocated by a mass of people with grand misguided intentions. For instance I’ll accept tax cut from Kevin as a positive thing even if he does it because Santa visited him in a dream and said let there be tax cuts.

Terje you fool. When you campaign for the carbon tax YOU ARE CAMPAIGNING FOR THE CAP AND TRADE. Once you start backing up these lies you don’t get to nuance their final application. The idea is to oppose the taxes and the lies.

We don’t face warming we face cooling. You have to put aside this phony notion of scientific consensus and only take into account scientific evidence. But if the world did overheat, which it cannot, but if it did, cooling it is simple and cheap. And would not involve this lunatics campaign to reduce CO2-output.

Now we don’t want to be a party which backs up every bit of leftist crankery, unscience and lies that come along do we? Since when have you taken all your science from the UN and Tim Lambert?

I may be a fool, however I’m also able to delete your comments. I vacated the Catallaxy discussion specifically because I’m not interested in wading through your insult wars. Contrary to what Jason Soon might think this has nothing to do with thick skin. It is a question of economy. It is a question of keeping dialogue open to multiple parties rather than sacrificing it to the loudest and rudest who merely want to engage in head kicking turf wars. Reading pages of abuse as you and JC kick the crap out of Fatfingers, Lambert, me, Jason, eachother and anybody that bites merely to keep up with the substance of the discussion is boring with a capital “B” and discouraging with a capital “D”. I don’t know who let your comment out of moderation (it wasn’t me) but I’m quite tempted to put it back there. Policing you with subtle regard for the content of each comment is a tax on my time I don’t wish to suffer. Your ideas are worthy of discussion and I think you have an interesting perspective, I even read your blog occassionally. Whenever I have met you in person I find you to be bright, witty, entertaining and intelligent. And yes even somewhat charming. I’d even go so far as to say I like you. However you have no personal disipline when it comes to blog dialogue with your opponents and you have no inclination to develop any. Too much of what you say is polluted with mindless abuse and childish point scoring. So as much as it saddens me to say this, please piss off.

And if anybody wants a meta conversation about Graeme forget about doing it under this article because I’ll delete those comments at random without further apology or explaination. If you like his ideas and want to make them your own and champion them politely then thats fine.

The objection that the ruling party could take the idea of a carbon tax and run with it, without keeping it revenue-neutral, is a valid one. Though I don’t know if anyone, even luminaries like Fleeced, can say definitely that it WOULD happen, given the professed zeal for tax cuts exhibited by both Labor and Liberal governments.

So it’s a risk that advocating a carbon tax will lead to one being implemented badly. What’s the alternative? Keep carping about the inferior cap and trade proposal that’s gaining momentum? Say nothing at all on the subject, and hope that governments will do the right thing? Yeah, right.

No matter what policies any of us call for, governments can botch the job, as they have done repeatedly with otherwise worthy ideas – like many privatisations, for example. That shouldn’t stop anyone from advocating good policy, and a revenue-neutral carbon tax IS good policy. Even if you disagree with scientific experts on their area of expertise, the carbon tax makes economic sense.

The core disagreement, I think, is between those who think government action is inevitable and those that think we can stop government action by being opposed to it.

I think government action is inevitable. Given that, I promote the government action that is least harmful. That is, a revenue neutral carbon tax.

I think it is naive to assume that Rudd hasn’t heard of carbon taxes. I’m sure he has. We’re not advocating a tax on top of other measures. If he wanted to impose a revenue positive tax AND cap-and-trade I’m sure he already knows they are both options. Our point is advocating the tax as a viable option and outlining the benefits. And opposing any other measures.

When you say “our point” I’m not sure who you are speaking for. However I agree with you.

I’m by no means convinced by the scientific arguments for AGW. The theory is good but it also has gaps and contradictions. However I’m convinced enough to advocate no regret tax reform. A broadened of the fuel tax base with CO2e being a basis of the tax calculation is such a reform. And if it stops the French from initiating a push for punitive tariffs on nations such as ours then it is also a cheap diplomatic guesture.

In any case given the chance to broaden the fuel tax or to cut income tax or to abolish payroll tax I don’t mind using green popularism as a means to a worthy end. A cap and trade scheme will cost us more on our electricity bill but rather than offer relief on other tax bills the cash will be essentially handed to those that build wind farms.

DavidL — it’s fairly standard practice to explain your editing activities on a thread. The ALS is open to all manner of intellectual criticism, but we have also been clear that we do not have tolerance for excessive insults, trolling or thread-wrecking.

Fleeced — you seem to switch between ultra-optimist (we can avoid any govt action on AGW if we just hope hard enough) to ultra-pessimist (we’re going to get all the bad with no tax cuts, no matter what).

The realistic reading of the political situation will tell you that (1) action is inevitable; and (2) it certainly is possible to shift that action towards more market-friendly solutions. If you don’t want to help, then you’re obviously a traitor to the cause… 😉

No, I’m not an optimist – we will get action regardless. In fact, like it or not, we will get carbon trading. We’ll possibly get a tax as well, but as the low tax party, I think LDP should oppose all tax increases and all new taxes (and yes, I know this isn’t the LDP site).

I understand the political pragmatism of compromise. But compromise is something do after you get into power – not before. Somebody needs to take the non-interventionist position.

You are right about this not being the LDP site. This is hardly the first topic where I have looked at ideas or compared positions that have no meaningful correlation with LDP policy or libertarian purity. For instance I don’t think we should have a minimum wage (heck Sweden and Denmark don’t) and neither does the LDP, but I’ve previously expended energy advocating a regionalisation of Australias minimum wage and I still think thats a good barrow to push because it gives regard to the sincere concerns of minimum wage advocates (ie most of the Australian population) whilst introducing flexibility and improving outcomes. Pitching policy requires some appreciation of peoples beliefs even if those beliefs may be flawed. There are lots of ways to advance reforms, some are pre-emptive, some entail symbolic or real concessions to those you don’t broadly agree with. There is a time and a place for rigid solidarity with ideological purity (or party platform) and a time and a place for outreach. A revenue neutral carbon tax that broadens the application of the fuel tax or cuts income tax offers precisely such an opportunity. The lets oppose AGW action and advocate doing nothing and oppose doing anything approach is increasingly an isolationist position. Which in my view seems like a silly position to adopt when a perfectly reasonable tax reform offers an easy symbolic guesture to what is now the vast majority of the population whilst also remaining a perfectly reasonable tax reform.

However to be clear these opinions are my own. Many will disagree with the political logic or the policy logic or other aspects of my view. Hopefully some of them will share their reasoning with me in a clear and good natured manner. Such dialogue is how we (ie you or me)can learn how to strengthen our arguments or else find cause to abandon them.

One final point. Nobody ever ascended to a position of power without a large slab of pragmatism except perhaps children born to monarchs. The LDP is pragmatic enough to retain income tax even though it is a vile anti-libertarian tax that invades privacy and tilts the landscape in favour of large government. It is pragmatic enough to retain fiat currency even though fiat currency has caused mayhem and ruin over the last 100 or so years. It is pragmatic enough to play the democratic game even though this concedes legtimacy to the socialists who tend to win elections. The LDP is filled with pragmatism.

Terje will you please stop promoting this rubbish that Sweden and Denmark is some sort of deregulated labour market paradise because there is no minimum wage. Legislation effectively enshrines collective bargaining, privileges unions even to the extent of guaranteeing them a place on management boards and enshrines the right to strike (which strictly speaking is a breach of contract). The few non union employers have no choice but to go along and in certain circumstances non union employers if there are any have to give right of way to unions that want to move in. This is just a way of regulating the labour market through a different means.

OK, you *may* have got me for Denmark but the Sweden case was just as I suspected. Essentially what the government has done there is set a minimum wage indirectly by giving quasi regulatory powers to unions.

Oh and btw I would not completely trust the Heritage index for Denmark and Australia either. As I think this was discussed before, Alex Robson and Peter Saunders were invited to critique the Heritage ranking of Australia at the CIS and pointed out that they set Australia’s ranking too high precisely because Heritage had misleadingly only looked at the exitence statutory minimums and failed to understand how the award system works. Email Alex for more info on this.
If Heritage can stuff up so spectacularly on Australia, I wouldn’t put it past their ignoring the quasi-governmental forms of regulation in Denmark either. Both the 99.9 and 94.2 look completely implausible. You are making the same mistake they did – looking only at statutory minimum wages.

And what’s with the ‘maybe’ – you are relying on the Heritage Index to disprove my point for Norway and yet you don’t accept it for Sweden? double standards. But more to the point this is just like when you were trying to give a free pass to the EU as some free market paradise because their federation was only embryonic whereas the US was in place for longer.

Don’t have time to do anymore investigating for now but the fact union membership is so high would suggest that Denmark has the same sorts of pro-union policies as Sweden unless there are true huge cultural gaps that make people in English speaking countries not want to be in unions at all except for taxeaters and bank clerks and everyone in Scandinavia wanting to be in a union. Happy to know more about the reason for this.

This is all off topic but a few quick points. I could be wrong about Sweden and even about Denmark and you could be entirely right. In this discussion I raised them merely in passing. I’m not exhibiting a double standard just operating with information available. Your opinion is not substantial information (seriously it isn’t) but if it is based on substantial information then I’m not uninterested if you wish to share.

And I never said the EU was a free market paradise. I have said that the EU has a good federal structure because unlike Australia and the USA the tax powers of the EU are not centralised and the minimum wage is not centralised. I also like the fact that the military is not centralised. In theory when coupled with a common currency and labour and capital mobility (all of which the EU have) this should drive down the tax rate across the EU, as indeed appears to be happening. If Australia and the USA decentralised taxation and wage regulation they would be better federations than they are. I’ve never said that the EU is better than the USA or better than Australia just that as a federalist system it is structured better in some regards. Is this view so difficult to comprehend?

p.s. My cousin is a union official in Denmark. Based on his anecdotes the unions in Denmark are more like social clubs and service providers (like student unions here) with wage negotiation being conducted within a culture far less militant than in Australia. My father (who is Danish) joined the carpenters union when he arrived in Australia in the 1960s because where he came from that was the done thing (his father having been a union official). Dad was somewhat shocked to learn that having taken his money the union in Australia offered nothing in the way of job search services or accomodation assistance. He soon came to regard Australian unions as something of a predatory menace.

I would appreciate less of the faux-civility you pride yourself on Terje and more intellectual honesty.

I’ve already explained how I understood the Swedish system to work and how the privileging of unions as a bargaining instrument leads to de facto regulation of the labour market. Just because I didn’t supply a link doesn’t mean it’s an ‘insubstantial opinion’. c You can go look it up yourself. I then conceded the Denmark point but supplied the links demonstrating the complexity of the issue in Denmark. I also supplied an anecdote about what I saw at a CIS debate and even named names but this was based on an event I actually attended. Here you are supplying an anecdote yourself of some experience of some relative of yours but I guess because it’s coming from you it’s not ‘insubstantial’ whereas mine is.

Furthermore the very thing you gave in response (i.e. the Heritage link) *supported* the thesis that Sweden wasn’t as free as you thought though you used it somehow to simultaneously respond to my Denmark point but not concede the Sweden point.

I did the honest thing and said maybe you were right about Denmark but supplied the links demonstrating the complexity of the issue in Denmark.

Of course you evade the charge of incivility by not swearing but that’s basically it. I find intellectual dishonesty a lot more offensive than 4 letter words. I prefer the upfront rudeness of JC or Bird to this slimy behaviour of yours and I’ll bear it in mind when you complain about rudeness on other forums for what? the 3rd or 4th time? Anyway I’m done trying to engage with you.

Jason – I’ve said maybe you are right about Sweden. I’m not refuting the notion that the heritage index has problems. And all I said in the first place was that Denmark and Sweden don’t have a minimum wage. I never said that Denmark and Sweden were the benchmark for labour laws. You stretch a long bow accusing me of intellectual dishonesty. You only achieve the claim by infering that I defend things which I have not defended. In fact your opening comment on this issue is deliberately misleading because it claims (entirely falsely) that I promote Sweden and Denmark as deregulated labour market paradises. A strawman arguement. Just as you used a strawman argument about the EU in which you accuse me of regarding it as a free market paradise. I know that blowing down strawmen is pretty easy but it doesn’t prove anything.

For clarity my comment at 35 was being drafted whilst you posted 31-34.

And there is nothing insincere about my views on civility. I do believe that Catallaxy allows a rude and abusive culture that detracts from otherwise good content. I’m not pretending to think civility is a good thing, I actual do think it is a good thing.

You should always be civilised in communication with fellow libertarians, except for GraemeBird, whom it is fair to hate on contact, because you know he can’t write without a swearword appearing.
As for Scandinavia, I would include Russia in this observation- cold climates make people more inclined towards statism and groupism, because of all the communal activities to stay warm in the snow in winter. It’s just a general observation, not a rule, but I think it would add an extra push to communality.

Gerry’s comment that Lambert referred wasn’t great, but notice how Lambert was trying to head kick another free market guy.

He’s run that bog of a site for over 7 years now and nearly every one of those threads is a hate thread against someone.

He ignored Jackson’s economics discussion while focusing on some side issue trying to sully a reputation.

Matter of fact I agree with John’s argument about carbon taxes. Not because I think it’s superior but it’s like choosing between Fascism or communism when it comes to AGW and taxes.

However I actually think Gerry presented a pretty decent case to debate about the effectof carbon taxes on capital accumulation. It has merit and its worth investigating.

The poison little cherub- Lambert- only knows to attack people in dishonest ways. I’d behave the same way anytime a venomous creep goes after one of our own in a dishonest way- even you of John believe or not.

I might add that the one time I have ever seen Lambert discuss quasi economic issues about AGW was when he suggested wind is superior because its “free”. After 7 years that’s all he knows about the subject. He’s a fake.

Wind isn’t free, it is abundant on Antarctica, but legally you cannot set up wind farms there. The transmission losses would be awful as well. Plus the cost of actually setting up the necessary capital.

No one knows what energy source is best. The Government shouldn’t support one fetish over another.

We already have a carbon tax. All we need do to mitigate AGW is to broaden the base and lower the rate.

JC – I am not getting stuck into you even if I am critical of you. In fact I vacated a discussion because I wasn’t interested in a game of endlessly snarking with you. I have been entirely honest about the reasons that I vacated that discussion. There is no deceit on my part.

I have no problem with you being critical of Lamberts ideas positions or logic. I am not defending his views. However it is really hard for me or anybody else to form an opinion of people like Lambert when all I read is reams of derogatory remarks spewing forth from you. I find that annoying and distracting. So I moved on. Or at least I tried to. If I had been wiser I would not have expressed my view here that Catallaxy is routinely feral. I regret encouraging any spill over from Catallaxy. But what is said is done. You make your choices, I’ll make mine.

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